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Table of Contents
EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Goodwill and Other Intangible Assets
Goodwill
The Company has historically operated two reportable segments, Business Services and Consumer Services. Effective September 30, 2015, the Company
implemented certain organizational, operational and reporting changes that resulted in the disaggregation of its Business Services segment into three separate
reportable segments: Enterprise/Mid-Market, Small Business and Carrier/Transport. The Consumer Services segment was not impacted. For further information
concerning the change in reportable segments, see Note 16, “Segment Information.” Upon disaggregation, the Company reassigned the goodwill balance of its
legacy Business Services segment to the newly formed reportable segments based on a relative fair value allocation method. The following table presents the
reassignment of goodwill to the newly formed reportable segments:
Enterprise/
Small
Carrier/
Business
Consumer
Mid-Market
Business
Transport
Services
Services
Total
(in thousands)
Balance as of December 31, 2014
Goodwill $ —
$ —
$ —
$ 393,409
$ 88,920
$ 482,329
Accumulated impairment loss —
—
—
(344,578)
—
(344,578)
—
—
—
48,831
88,920
137,751
Change in reportable segments
Goodwill 237,982
57,137
98,290
(393,409)
—
—
Accumulated impairment loss (208,443)
(50,045)
(86,090)
344,578
—
—
29,539
7,092
12,200
(48,831)
—
—
Balance as of December 31, 2015
Goodwill 237,982
57,137
98,290
—
88,920
482,329
Accumulated impairment loss (208,443)
(50,045)
(86,090)
—
—
(344,578)
$ 29,539
$ 7,092
$ 12,200
$ —
$ 88,920
$ 137,751
There were no other changes in the carrying amount of goodwill during the year ended December 31, 2015.
Other Intangible Assets
The following table presents the components of the Company’s acquired identifiable intangible assets as of December 31, 2014 and 2015 :
As of December 31, 2014
As of December 31, 2015
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in thousands)
Customer relationships $ 359,187
$ (271,968)
$ 87,219
$ 346,825
$ (323,365)
$ 23,460
Developed technology and software 26,261
(22,096)
4,165
26,261
(24,396)
1,865
Trade names 1,521
(1,521)
—
1,521
(1,521)
—
Other 1,800
(1,694)
106
—
—
—
Other intangible assets, net $ 388,769
$ (297,279)
$ 91,490
$ 374,607
$ (349,282)
$ 25,325
Definite-lived intangible assets are amortized over their estimated useful lives. The Company amortizes its customer relationships using the straight-line method to
match the estimated cash flow generated by such assets, and amortizes its developed technology and trade names using the straight-line method because a pattern
to which the expected benefits will be consumed or otherwise used up could not be reliably determined. As of December 31, 2015 , the weighted average
amortization periods were 5.3 years for customer relationships and 3.8 years for developed technology. As a result of a change in estimate for the estimated useful
73